Optimism is the more or less conscious tendency to see the glass as half full rather than half empty. So far, optimism is generally well received!

But in project management - and investment - optimism can be less desirable.

The underlying idea is that when companies make decisions, they tend to let optimism run wild, rather than rationally weighing up the gains, losses and probabilities relating to the project or investment.

In other words: costs are underestimated and benefits overestimated.

Time optimism, on the other hand, describes optimism about the time required to complete a project, and gives rise to what is known as schedule slippage. The adage "schedule drives cost" underlines the increase in costs resulting from such slippage.

The problem with optimism, then, is that by overlooking the potential for error and miscalculation, companies have a propensity to commit to investments and projects that are unlikely to meet time and budget constraints, or produce the desired results.

This over-optimism is linked partly to so-called cognitive biases - "errors" in the way the mind processes information - and partly to organizational pressures.

Among the cognitive biases related to this over-optimism is the natural tendency to exaggerate our own talent, for example by attributing positive results to ourselves and negative results to external factors, whatever their true cause.

We also tend to exaggerate the degree of control we have over events, neglecting the role of chance.

An illustration of these two principles: "our ice cream sales have exploded this year, it's because we have the best flavors and the best service" rather than "our ice cream sales have exploded this year, no doubt because of the heatwave, the closure of our main competitor and the increase in tourism in the region (and maybe the flavors and service have also played a role)".

An exaggeration of our own abilities and degree of control can lead us to believe that we'll be able to avoid or easily overcome the problems associated with a project.

This is where it gets tricky.

As HBR wrote a few years ago, the scenarios used for planning are generally inadequate, because every complex project is subject to a myriad of problems that our imagination is unable to perceive from the outset (in their entirety).

The initial plan therefore potentially underestimates the probability of things going wrong.

In short, we have over-confidence in ourselves and in our ability to manage events, combined with an underestimation of the probability that things will get tough.

From a financial point of view, managers will tend to set aside reserve funds to cover project overruns, but their analysis is often skewed by initial optimism: they therefore plan too little, stick to their initial estimates, and fail to take sufficient account of the likelihood of delays, problems and scope creep.

To recap, we tend to be overconfident that things will work out, while at the same time reducing our ability to protect ourselves from risk.

It's a bit like crossing the Atlantic on an air mattress, because you know how to swim and it floats anyway.

Finally, there's the "groupthink" bias, which is the propensity of stakeholders in a project or group to converge with the general opinion, for the sake of harmony and conformity.

Another major problem is internal competition within companies: budgets and time to devote to new projects are limited, so stakeholders have an interest in proposing execution plans and forecasts that accentuate the positive aspects, in order to increase the likelihood of being the project chosen for investment.

So not only are there cognitive biases, but the dynamics of the company will encourage their expression.

To reduce the risk of a project, the initial plan is fundamental, and it must be as realistic as possible.

But to counteract the effects of over-optimism, one solution is to look at similar projects in the company's past - or those of other organizations - and gather data on the budget and time it took to complete them.

Better still, by calling on external experts, we can also reduce the bias of belonging.

This reduces cognitive biases, and gives a more realistic overview of budget and time constraints.

This method, known as the "outsider's view", is particularly advantageous for projects in which the company has little or no experience.

It's true that in some cases, finding precedents is difficult, such as when it comes to developing or implementing new technologies: in these cases, you need to try and broaden the category of past projects you're interested in. You could, for example, include projects that have required the implementation of other new technologies, or projects by third-party companies that have used the technology you're looking to develop, etc.

So, while it's obvious that optimism needs to be promoted internally, to keep employees motivated and focused on the project, the initial decision on whether or not to invest in said project needs to be based on an outside view, better able to make realistic forecasts, based on similar past projects.

At AquaFin, our project management training courses use simulations to help you learn how to launch a project in the right way, or how to get it back on track when it's running out of steam. Using a playful solution like a simulation allows us to better address project dynamics, while applying your new knowledge directly, in a realistic context. This will make it easier for you to draw on your experience in future projects!

You've got it: to avoid any more cold sweats in the launch and execution of your projects, don't hesitate to contact us.